Equity Line of Credit

An equity line of credit (ELOC) is a standby financing arrangement that gives a newly public de-SPAC company the option to raise capital by selling shares directly to a committed buyer — usually a specialized fund such as a Cantor Fitzgerald affiliate or a dedicated ELOC provider — at a discount to the prevailing market price, typically 3–5% below VWAP.

ELOCs are structured as committed purchase facilities with a maximum dollar amount (e.g., $50 million) and a term (typically 24–36 months). The company controls the timing and amount of each drawdown, subject to daily volume limits and minimum price conditions. This flexibility makes ELOCs attractive to companies that want access to capital without committing to a fixed financing schedule.

The trade-off is dilution and market impact. Each drawdown increases the share count, and the discount to market price means existing shareholders bear a cost. Heavy ELOC usage can create a persistent overhang on the stock price as the market anticipates future dilutive issuances. For this reason, ELOCs are most commonly used as a financing backstop rather than a primary capital source.

ELOCs became prevalent in SPAC deals during 2023–2025 as an alternative to PIPEs. In deals where PIPE demand was weak or redemptions were high, sponsors included ELOCs as part of the deal's financing package to ensure the combined company had access to post-closing capital. SpacDesk tracks ELOC facilities in the capital structure dataset, including commitment amounts, pricing terms, and actual drawdown history from subsequent filings.